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How to get a weekly/ monthly income from savings
bolkonsky
Posts: 1 Newbie
At the end of 2018, I will receive a state pension, at the age of 65. I am interested in finding ways to supplement ( to cover my living expenses) my state pension by using my savings (over £50,000 in building societies to earn a weekly/monthly income. I have looked at the option of renting out property, but there doesn't seem to be a suitable deal available. I ill welcome any advice on this subject.
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Comments
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You have obtained a new state pension statement?
https://www.gov.uk/check-state-pension
Do you have any private pension provision?
https://www.money.co.uk/savings-accounts/monthly-interest-savings-accounts.htm0 -
If you have unused Personal Allowance available, for example if your State Pension is your only pension income and you have no other earnings from a job, self employment, rental income etc then the £2880 becomes £3600 pension trick is popular on the pensions board.
Open a personal pension/SIPP and deposit £2880. The pension company added basic rate tax relief you have £3600 in your pension fund.
You can leave this as cash rather than invest it and when you withdraw it 25% is tax free with the remaining 75% being taxable. So if you have spare Personal Allowance then there may be no tax payable
There are numerous threads about this on the pensions board.
You need to consider pension provider fees and drawing money out might limit how much you can subsequently pay into a pension (possibly limited to £4k/year thereafter).
Hargreaves Lansdown are often mentioned for this but you need to look at different companies and their rules and charges to know what would be best for you.
In theory you can give the pension company £240/month and get £300/month back.0 -
Dazed_and_confused wrote: »Hargreaves Lansdown are often mentioned for this but you need to look at different companies and their rules and charges to know what would be best for you.
They are very good in our experience, but if you are going to use this ruse be careful not to empty your pension fund within a year of opening it - there is a heavy charge for that.
As D&c implies, if you were to contribute £2,880 today you could then start drawing out a monthly sum from (if memory serves) the second half of next month. Then top up with another £2,880 in the new tax year i.e. on or after 06/04/2019.
The ruse generates you £720 p.a. profit "out of thin air". You can continue the contributions until you turn 75.
Apart from that there are savings accounts that pay the interest monthly. Googling turned up these:
https://moneyfacts.co.uk/news/savings/6-of-the-best-monthly-interest-savings-accounts/
https://www.money.co.uk/savings-accounts/monthly-interest-savings-accounts.htmFree the dunston one next time too.0 -
Just to expand on @Dazed and confused's tax-relief-via-SIPP suggestion, if you are still working at the moment, you may be able to start your personal pension/SIPP with a higher amount. I think your gross contribution in any tax year can be as much as your earnings in that year (up to £40K max).
If you earn less than £3600 (or you earn nothing at all) then you are restricted to £3600 (i.e. £2880 from you and £720 tax-relief from HMRC)
Beyond that, you will need to take advice on what to do with the money you put into your pension pot (keep it as cash or invest it for growth) and whether to pay into it every year to get additional tax-relief - which you can do up to age 75.
I think the tax-relief is a powerful incentive to follow this route especially if (as also said by @Dazed and confused) you will have unused personal allowance after taking your SP.
There are plenty of forum users following this type of process - hopefully they will come along and let you know how beneficial (or otherwise) they have found it and who they have used as a provider.0
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